Two key units of Samsung Group, South Korea's top conglomerate, are poised to hold crucial shareholder meetings Friday on their merger plan that has been strongly opposed by a U.S. hedge fund, which calls it a low-ball deal.
Shareholders of Samsung C&T Corp., the construction arm of Samsung, are scheduled to meet Friday morning to cast their ballots on the 8.9 trillion won ($7.76 billion) all-stock takeover offer by Cheil Industries Inc., the group's de facto holding firm.
Cheil Industries is also slated to hold its own shareholder meeting at the same time to vote on the proposed merger.
The vote results will decide whether the two Samsung units will be able to push through the high-stakes deal, which in turn could determine Samsung's future.
Claiming the merger proposal undervalues Samsung C&T and goes against the interests of its shareholders, Elliott Associates, the third-largest shareholder in Samsung C&T, has been strongly opposed to it.
It has filed court injunctions in Seoul seeking to block the deal, while encouraging other shareholders to vote against the merger that it called "wholly unfair."
Samsung C&T must win two-thirds of the ballot and a third of outstanding shares. Given that the attendance is expected to be high at 80 percent at least, it needs 53.3 percent of the votes to proceed with the merger.
The merger proposal has drawn keen attention as it is considered vital for the smooth succession of Lee Jay-yong, the son of the group's patriarch Lee Kun-hee, who's been bedridden for over a year after suffering a heart attack.
Market watchers said Samsung is about 11 percent shy of the voting rights needed to win approval for the proposed merger.
According to them, shareholders with a combined 42.12 percent stake are likely to cast yes votes for the merger plan. They include the Lee family, other Samsung affiliates, KCC Corp. and local institutional investors including the National Pension Service, the single largest shareholder in Samsung C&T.
While it is not clear how many foreigners will side with Samsung, they hold a combined 33.53 percent stake, of which 7.12 percent is owned by Elliott.
The merger proposal will be nixed if 23 percent of shareholders present at the meeting vote against it.
Such uncertainties have led Samsung C&T to bolster last-minute efforts to persuade minority stakeholders, who hold a combined 24.33 percent stake, to delegate their voting rights in person or vote for the plan.
On the eve of the shareholder meeting, Samsung C&T launched a massive media campaign through front-page advertisements in over 100 local newspapers, TV stations and online outlets nationwide, urging shareholders to support the merger.
The shareholder meeting will also take up other agendas raised by Elliott. It has asked Samsung C&T to change its articles of corporation to allow dividend payouts in specie as well as in cash, and to also include interim payouts.
If the merger proposal is passed, a new entity, which will operate under the name of Samsung C&T, is scheduled to set sail on Sept. 1. (Yonhap)
